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(Kitco News) - Comex gold prices are moderately higher Monday morning. The precious metals markets are being supported by key outside markets that are in a bullish posture early this week—a weaker U.S. dollar index and higher crude oil prices. December gold last traded up $9.50 at $1,724.10 an ounce. Spot gold was last quoted up $10.50 at $1,724.75. December Comex silver last traded up $0.32 at $32.69 an ounce.

There is a bit more of a “risk-on” trader and investor mentality in the market place to start the new trading week Monday. European and Asian stock markets were higher and the Euro currency also rallied on notions the Obama administration and the U.S. congress are moving closer to a deal to avoid the “fiscal cliff” implementation of tax increases and spending cuts that would be implemented in January, should no agreement be reached.

The better investor risk appetite comes despite still-high tensions in the Middle East. Israel is taking a very hard line against Hamas, including heavy air strikes in the Gaza Strip over the weekend and the possibility of moving ground troops into Gaza. Such could agitate Egypt and further inflame Iran. The situation could escalate quickly, which would in turn likely produce significant safe-haven demand for gold. Recent history shows that the gold market tends to lag when potentially destabilizing geopolitical events occur, but when those events then escalate a bit, gold then kicks into a higher safe-haven demand gear and rallies. There were reports Monday that there may be negotiations occurring between Israel and Egypt on de-escalating the present situation.

There is a meeting of Euro zone officials Tuesday on when to disburse the next tranche of bailout money to cash-starved Greece, and on what terms Greece will be held in order to receive the money. If EU officials write off Greek debt, then other financially troubled EU countries would likely want the same. German officials Monday reiterated opposition to any Greek debt write-down. The overall European Union sovereign debt crisis remains a major uncertainty and major worry in the market place.

The U.S. dollar index is moderately lower Monday morning on some profit taking, but is still hovering near a two-month high. The U.S. dollar bulls still have the overall near-term technical advantage. Meantime, Nymex crude oil prices are trading higher Monday morning. The Middle East tensions are limiting the downside in oil, but slack worldwide demand and adequate U.S. supply are limiting the upside. The crude oil bears still have the overall near-term technical advantage as a two-month-old downtrend is in place on the daily bar chart.

U.S. economic data due for release Monday includes existing home sales and the NAHB housing market index.

The London A.M. gold fixing is $1,723.25 versus the previous P.M. fixing of $1,713.50

Technically, gold futures bulls still have the overall near-term and longer-term technical advantage. The gold bulls’ next upside price breakout objective is to produce a close above solid chart resistance at the November high of $1,739.40. Bears' next near-term downside price objective is closing prices below solid technical support at the November low of $1,672.50. First resistance is seen at the overnight high of $1,730.00 and then at $1,739.40. First support is seen at the overnight low of $1,713.40 and then at last week’s low of $1,704.50.

December silver futures bulls have the overall near-term technical advantage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $33.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at the November low of $30.655. First resistance is last week’s high of $32.93 and then at this week’s high of $33.00. Next support is seen at the overnight low of $32.284 and then at $32.00.

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